GBP to AUD Forecast: How will GBP/AUD rates perform this January?

RBA keeps rates on hold

In this GBP to AUD forecast I discuss the expectations for the GBP/AUD exchange rate in January. Rates are likely to be largely dependent on the outcomes from the two biggest drivers on the currency markets at present, namely Brexit and also the Trade Wars. Trying to predict these factors is no easy feat and clients relying too much on one particular outcome, might be wise to consider all eventualities.

The January 14th Parliamentary vote on Theresa May’s Brexit will be a huge factor in determining how the pound behaves this January. Overall, the expectation that the UK might leave with no-deal could see sterling much weaker.

There is the possibility of Mrs May’s Brexit plan being passed through Parliament but many feel it will not. If it does not, we could then have all manner of possibilities including the chance that there will be a General Election or another Referendum. Sterling is likely to be very volatile in the run-up to the vote, which will only put more pressure on GBP/AUD exchange rates.

US / China Trade War continues to influence GBP/AUD rates

The Trade Wars are a very important point to recall too on the currency markets, this has been a big driver on the Australian dollar. The Australian currency is weaker as we enter 2019, as the market fails to have confidence over how the Chinese economy will perform from the negative effects of the Trade Wars.

Whilst I do think the pound is likely to struggle further in 2019, I think the Aussie will also struggle too and it is very difficult to predict the precise behavior. What I would expect is a range of trading between the lower 1.70s around the 1.72 bottom hit last Autumn. In terms of highs we are already over 1.81 and could quite easily test 1.85, perhaps higher if Mrs May’s Brexit deal gets through.

With two such major events to drive the pair, Brexit and the Trade Wars, the possibility for some large unexpected swings are high. Clients with a position buying or selling Australian dollars for pounds would do well to make sure they are fully prepared and have considered all eventualities to help to try and maximise, and to protect, their exchange rate.

If you would like to discuss my GBP to AUD forecast in more detail or would like to learn more about GBP/AUD rates, you can use the form below to send me a message directly.